Fund Objective

There is no fund objective available from this fund manager.

View on Past Performance

In January, weak economic data, the potential downgrade of monoline bond insurers and the disappointment over the proposed US fiscal stimulus package led government bonds to perform well. Equity markets fell as they began to price in a US recession and bonds experienced a 'flight to quality' bid as a result.The US Federal Reserve (Fed) unexpectedly cut interest rates by 0.75% at an 'emergency' intra-meeting and another 0.5% at their scheduled meeting. These measures and a potential bailout for monoline insurers helped equities recover some of their losses.

Future Expectations

Markets will remain volatile over the coming months; the Fed appears ready to cut interest rates aggressively to stop a recession materialising but a sharp US slowdown is now underway. The UK economy is vulnerable to tighter credit conditions because of its high levels of consumer debt and reliance on financial services.The US slowdown may knock on to the global economy with the European Central Bank likely to ultimately cut interest rates.Whilst government bond markets appear expensive on most valuation metrics, volatility in equity markets should ensure that government markets are well supported. We remain overweight government bond markets, preferring UK and European markets to the US.

Fund Details